IBM slumps to two-year low on weak revenue

SaumyaVaishampayan

SAN FRANCISCO (MarketWatch) — Shares of tech bellwether International Business Machines Corp. skidded on Thursday to their lowest level in two years after the company reported its quarterly revenue fell short of expectations.

Decliners

IBM
IBM, -1.33%
dropped 6.5%, the worst laggard in the S&P 500
SPX, -0.88%
The computer company on Wednesday said its third-quarter profit rose to $4.04 billion, or $3.68 a share, from $3.8 billion, or $3.33 a share, a year earlier. Adjusted per-share profit was $3.99. Shares came under pressure as revenue fell to $23.7 billion from $24.7 billion in the year-ago period. Analysts had expected earnings of $3.96 a share on revenue of $24.79 billion, according to FactSet.

EBay
EBAY, -0.42%
shares shed 4.3%. The e-commerce company late Wednesday reported its third-quarter profit rose to $689 million, or 53 cents a share, from $597 million, or 45 cents a share, a year ago. In the fourth quarter, eBay projected adjusted earnings of 79 cents a share to 81 cents a share, below the 83 cents a share forecast by analysts in a FactSet survey.

UnitedHealth Group Inc.
UNH, -2.24%
shares fell 5.1%. The managed-care company reported third-quarter earnings of $1.57 billion, or $1.53 a share, which was in line with expectations. It also raised the low end of its full-year outlook by a nickel to a range of $5.40 to $5.50. “This result may disappoint investors looking for a larger beat and more of a raise this year given the continued low utilization environment,” said Thomas Carroll, an analyst at Stifel Nicolaus, in a note.

Union Pacific Corp.
UNP, -1.62%
shares slid 3.8%. The railroad operator said Thursday its third-quarter profit rose 10% to $1.15 billion, or $2.48 a share, while revenue increased 4% to $5.57 billion. Analysts had expected earnings of $2.48 a share on revenue of $5.61 billion, according to FactSet. Flooding in Colorado resulted in lost revenue and increased costs, adversely affecting operating income by about $10 million, Union Pacific said.

Shares of Travelzoo Inc.
TZOO, +0.00%
sank 12%, at one point triggering Nasdaq’s short-sale circuit breaker. The online travel company reported a third-quarter net loss of $1.24 a share, compared with a profit of 21 cents a share a year ago. The company blamed “disappointing results” in search and local businesses for the weak quarterly numbers.

Gainers

Verizon Communications Inc.
VZ, -1.00%
shares rose 3.7%. The telecommunications company said Thursday its third-quarter profit jumped to $2.23 billion, or 78 cents a share, from $1.59 billion, or 56 cents a share, in the year-ago period. Adjusted earnings rose to 77 cents. Revenue increased to $30.3 billion from $29.0 billion. Analysts polled by FactSet had expected earnings of 74 cents a share on revenue of $30.2 billion in the third quarter.

SanDisk Corp.
SNDK, -2.09%
shares surged 8.8%. The maker of flash memory products on Thursday said its third-quarter profit jumped to $1.18 a share from 31 cents a share in the same quarter last year.

$GOOG:Google GOOG, -0.73%
snapped a six-day winning streak to fall 1.1%. The Internet company is projected to report earnings of $10.35 a share in the third quarter when it announces results after the bell. “While we like [Google] long term, we believe lower cost per click could be an issue in the third quarter 2013 results, which could weigh on investor sentiment,” said Sameet Sinha, an analyst at B. Riley & Co., in a report.

Watch Goldman Sachs, IBM

$CMG: Chipotle Mexican Grill Inc.
CMG, -0.74%
shares rose 0.3%. The burrito chain is projected to earn $2.78 a share in the third quarter, according to a Thomson Reuters poll. Analysts at Sterne Agee recently named Chipotle as the top pick in the restaurant category due to its dominant position.

The stock has done surprisingly well, gaining 39% as of Wednesday’s close since October 2012, when David Einhorn singled it out as a good candidate to short.

$BTU: Peabody Energy Corp.
BTU, -7.87%
shares gained 4.1%. The coal company Thursday said third-quarter adjusted earnings fell to 5 cents a share from 53 cents a share a year earlier but the result still beat analysts’ estimate of a loss of 4 cents a share in a Thomson Reuters survey.

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